The top 100 UK law firms achieved modest growth in 2016 but anticipate challenging market conditions ahead, according to PwC’s 25th annual Law Firms Survey.
Last year, a record 82% of firms reported revenue growth. That figure has reduced to 75% for this year. Profit per equity partner remained flat.
Increases in numbers of fee earners have also hit profits. The top 50 firms increased fee earner headcount by 7.6% on average in 2016, an investment that is yet to yield significant revenue growth.
David Snell, PwC partner, said: “As confidence returned to the sector last year, firms increased headcount in anticipation of continued improving market conditions.
“However, with the market turning out to be more challenging than expected and with increased competition from US firms and new entrants, spare capacity is now an issue for firms. This situation is likely to be exacerbated following the EU Referendum vote in favour of Brexit. Profit per equity partner and rate per hour are under pressure in a sector where supply outweighs demand.”
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